Bank of Am., N.A. v. Barr

• Citation: 9 A.3d 816,2010 ME 124
• Decision Date: 30 November 2010
• Docket Number: Docket No. Cum-10-173.
• Parties: BANK OF AMERICA, N.A. v. Constance H. BARR.
• Court: Supreme Judicial Court of Maine (US)

9 A.3d 816

2010 ME 124

BANK OF AMERICA, N.A.

v.Constance H. BARR.

Docket No. Cum-10-173.

Supreme Judicial Court of Maine.

Submitted on Briefs: Oct. 21, 2010.

Decided: Nov. 30, 2010.

Kate E. Conley, Esq., Susan J. Szwed, P.A., Portland, ME, for Bank of America, N.A.

Mark A. Kearns, Esq., Portland, ME, for Constance Barr.

Panel: ALEXANDER, LEVY, MEAD, GORMAN, and JABAR, JJ.

ALEXANDER, J.

[¶ 1] Constance H. Barr appeals from a judgment entered in the Superior Court (Cumberland County, Wheeler, J.) following a non-jury trial in which Banwas found to be personally liable for debt incurred on a small business line of credit. Barr arguesthat the court erred in admitting certain documents into evidence pursuant to the business records exception to the hearsay rule, M.R. Evid. 803(6), and that the evidence was insufficient to support several findings key to the court's judgment.¹ We affirm the judgment.

I. CASE HISTORY

[¶ 2] The record, including Barr's admissions presented at trial, supports the following factual findings. In 2004, Barr was the 100% owner of The Stone Scone, a business operating as a sole proprietorship. On January 7, 2004, Fleet Bank approved a $100,000 unsecured small business line of credit for The Stone Scone, conditioned upon receipt of a properly signed and witnessed authorization/personal guaranty.

[¶ 3] Acting on behalf of The Stone Scone, Barr executed and delivered to Fleet Bank a properly signed and witnessed authorization agreement/personal guaranty portion of the Fleet Bank small business services credit application, dated January 7, 2004. Fleet Bank created, and had sent, a letter addressed to Barr and The Stone Scone, dated January 12, 2004, which stated, "Dear Constance H Barr[:] Congratulations! Your company has been approved for a $100000 Small Business Credit Express Line of Credit," and provided certain of the line of credit's terms. Fleet Bank thereafter provided funds to The Stone Scone pursuant to the terms of the line of credit.

[¶ 4] Fleet Bank merged with Bank of America (BoA) in 2004. From February 2004 through November 2008, Fleet Bank, then BoA, sent account statements monthly, addressed to both Barr and The Stone Scone. The monthly statements show that advances were regularly made against, and payments were made to, The Stone Scone line of credit account throughout this period, and also indicate the applicable interest rate and fees.

[¶ 5] Two years after the line of credit was approved, The Stone Scone filed articles of organization with the State, registering itself as a limited liability company (LLC) and naming Barr as the manager. See 31 M.R.S. §§ 621, 622(2) (2009). BoA was not notified of the change in The Stone Scone's status. Had BoA been informed that The Stone Scone had organized as an LLC, it would have asked for documentation and a new line of credit agreement under the entity's name.

[¶ 6] The last payment made to the line of credit account was on October 28, 2008. That payment was "reversed" the same day. As of the last monthly statement, the principal owed on the account was $91,444.09.

[¶ 7] On November 4, 2008, BoA sent a past due notice addressed to Barr and The Stone Scone. No payments were made on the account thereafter. Barr admitted that, pursuant to the terms of the line of credit, interest on the unpaid principal balance continued to accrue at a rate of 6.5% per annum.

[¶ 8] In March 2009, BoA filed a complaint against Barr and The Stone Scone in the District Court. Barr removed the action to the Superior Court. There, BoA was granted leave to file two amended complaints, the second of which contains five counts: (I) breach of the Fleet Bank small business credit application, authorization and personal guaranty, and the terms of the Fleet Bank small businessexpress line of credit; (II) breach of contract; (III) unjust enrichment; (IV) attorney fees; and (V) breach of personal guaranty signed by Barr.² Counts I, II, IV, and V are against Barr individually, d/b/a The Stone Scone, and Count III is against Barr and The Stone Scone. Prior to trial, Barr stipulated to a judgment against The Stone Scone, LLC. The only issue for trial was Barr's personal responsibility for the debt.

[¶ 9] At trial BoA moved to admit exhibits 2, 3, and 4: business records consisting of monthly account statements addressed to Barr and The Stone Scone (Exhibit 2); the past due notice addressed to Barr and The Stone Scone (Exhibit 3); and the small business express line of credit welcome/approval letter from Fleet Bank addressed to Barr and The Stone Scone (Exhibit 4). Barr objected to these three exhibits, asserting that they do not meet the business records exception to the hearsay rule pursuant to M.R. Evid. 803(6) and that BoA's witness was not a "custodian or other qualified witness" within the meaning of Rule 803(6). The court consequently overruled Barr's objections and admitted the exhibits.

[¶ 10] The BoA's witness was a client manager for BoA, managing the relationship between the Bank and corporate and sole proprietorship clients throughout Maine. He testified that in his position he had access to small business lines of credit client accounts, including The Stone Scone's, and he regularly accessed such information in his position. He had worked for BoA and predecessor banks, including Fleet Bank, for fifteen years. Prior to the Fleet Bank/BoA merger, the witness worked for Fleet Bank as a bank manager in Rockland and Thomaston. The witness testified that Fleet Bank kept records relating to lines of credit opened for bank clients, and that those records are now maintained by BoA.

[¶ 11] The witness testified that as part of his duties with Fleet Bank, he was familiar with the Fleet Bank process for approving, opening, and maintaining small business lines of credit. He also testified that the welcome/approval letter from Fleet Bank to Barr was a true copy of the letter mailed to Barr and was an automatically-generated letter sent when a client is approved for a line of credit. It was Fleet Bank's regular practice to send such letters within a week of approval of a client's line of credit to the address listed for the client and to thereafter maintain electronic copies of these letters with the customer's account record as part of its regularly-conducted business activities.

[¶ 12] The witness testified that the monthly statements admitted as BoA's exhibit 2 were automatically generated each month, based on information entered by bank employees, and that he was familiar with how the statements were created and maintained as part of his job duties. The information on the statements was and is maintained electronically and sent to account holders monthly as part of BoA's regularly-conducted business activities. The Bank relied upon the information entered into its computer systems, used to generate monthly statements, to conduct everyday banking activities. The welcome/approval letter and the monthly statements may be printed and mailed out by a third-party vendor, but Fleet Bank/BoA created the approval letter and statements.

[¶ 13] The testimony indicated that the November 2008 past-due notice addressed to Barr is a letter that BoA generates and sends to clients as a matter of course as part of its regular business activities when an account is delinquent.

[¶ 14] The court entered judgment on March 5, 2010, finding in favor of Barr as to Counts I, III, IV, and V of BoA's second amended complaint. As to Count II, the claim for breach of contract, the court found that "there is no dispute that there was a contract between Stone Scone and [BoA], [so] the only issue is whether Barr individually is also liable on said contract." Concluding that The Stone Scone and Barr have always been one and the same as far as the Bank was concerned, the court entered judgment as to Count II in favor of BoA against Barr, individually, and against The Stone Scone, in the amount of $91,444.09 plus interest. Barr, in her individual capacity, then brought this appeal.

II. LEGAL ANALYSIS

A. Admissibility of Evidence

[¶ 15] Barr argues that the court abused its discretion in admitting BoA's exhibits 2, 3, and 4 into evidence, asserting that: (1) the witness offered to lay a foundation for the documents was not the "custodian or other qualified witness" required by M.R. Evid. 803(6); (2) the witness did not testify to facts that established a foundation for admissibility; and (3) therefore, BoA failed to establish a foundation for admitting the exhibits as business records, particularly given that, while Fleet Bank/BoA may have created the documents as electronic files, a third-party vendor for whom the witness did not work likely printed and mailed the welcome/approval letter and monthly statements.

[¶ 16] Evidence Rule 803(6) provides, in pertinent part, that:

The following are not excluded by the hearsay rule, ...:

(6) Records of regularly conducted business. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business, and if it was the regular practice of that business to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, ... unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

[¶ 17] We review the trial court's admission of exhibits 2, 3, and 4 pursuant to M.R. Evid. 803(6) for an abuse of discretion and clear error. State v. Nelson, 2010 ME 40, ¶ 9, 994 A.2d 808, 812; Capul v. Fleet Bank of Me., 1997 ME 140, ¶ 9, 697 A.2d 66, 69 (reviewing the court's findings regarding the...